Chapter 5 - Strategic capability and competencies

Question 1

Sources of strategic capability

What does the resource-based approach view as sources of strategic advantage?

Answer 1

Resources and competencies as sources of strategic advantage.

Question 2

Sources of strategic capability

What are the two types of resources that contribute to competitive advantage?

Answer 2

Tangible resources and intangible resources.

Question 3

Sources of strategic capability

How are resources and competencies assessed in terms of competition?

Answer 3

As basic/threshold (minimum required) or unique/distinctive (providing an advantage over competitors).

Question 4

Sources of strategic capability

What are threshold resources and competencies?

Answer 4

Threshold resources are the minimum level of resources required to compete, and threshold competencies are the minimum competencies required to compete.

Question 5

Sources of strategic capability

What are unique resources?

Answer 5

Resources that are difficult for competitors to imitate, valued by customers, and provide a competitive advantage.

Question 6

Sources of strategic capability

What are core competencies?

Answer 6

The activities and processes through which resources are deployed to achieve competitive advantage in ways others cannot easily imitate.

Question 7

Sources of strategic capability

What are the categories of resources?

Answer 7

Tangible resources, intangible resources, and human resources.

Question 8

Sources of strategic capability

What are tangible resources?

Answer 8

Financial and physical resources, including funds, land, buildings, machinery, and equipment.

Question 9

Sources of strategic capability

What are intangible resources?

Answer 9

Resources with no physical existence, including culture, brand recognition, intellectual property (e.g., patents, trademarks).

Question 10

Sources of strategic capability

What do human resources include?

Answer 10

The skills, knowledge, and experience of employees, as well as the way they work together and their motivation.

Question 11

Sources of strategic capability

What are the three distinct capabilities that add value, according to Kay (1993)?

Answer 11

Architecture (network of relationships), reputation, and innovative ability.

Question 12

Sources of strategic capability

What is competitive advantage?

Answer 12

The ability to generate greater returns than competitors over the long term through unique resources and core competencies.

Question 13

Sources of strategic capability

What are the two basic types of competitive advantage identified by Porter (2004)?

Answer 13

Cost advantage and differentiation advantage.

Question 14

Understanding, achieving and sustaining competitive advantage

What is the VRIO framework for assessing strategic capability?

Answer 14

A framework assessing resources and competencies based on Value, Rarity, Inimitability, and Organizational support.

Question 15

Understanding, achieving and sustaining competitive advantage

What does ‘value’ mean in the VRIO framework?

Answer 15

The worth placed on resources or competencies by a customer or organisation, based on their ability to exploit opportunities or neutralize threats.

Question 16

Understanding, achieving and sustaining competitive advantage

What does ‘rarity’ mean in the VRIO framework?

Answer 16

A resource or competence is rare if it is not generally available to competitors, thus creating competitive advantage.

Question 17

Understanding, achieving and sustaining competitive advantage

What does ‘inimitability’ refer to in the VRIO framework?

Answer 17

Resources or capabilities that are difficult for competitors to imitate, based on complexity, causal ambiguity, or culture/history.

Question 18

Understanding, achieving and sustaining competitive advantage

What is ‘non-substitutability’ in the context of competitive

Answer 18

The inability for competitors to substitute a company’s capabilities with other options, maintaining the advantage.

Question 19

Assessing strategic capability

Why is it important for an organization to continually assess its internal capabilities?

Answer 19

To ensure that the internal capabilities align with the requirements of external customers.

Question 20

Assessing strategic capability - Supply Chain Analysis

What role does supply chain analysis play in an organization?

Answer 20

It identifies how an organization’s resources are inputs that need to be transformed to add value, creating a unique selling point (USP).

Question 21

Assessing strategic capability - Value Chain Analysis (primary activities)

What are the primary activities in Porter’s Value Chain?

Answer 21

Inbound logistics
Operations
Outbound logistics
Marketing and sales
After-sales service

Question 22

Assessing strategic capability - Value Chain Analysis (support activities)

What are the support activities in Porter’s Value Chain?

Answer 22

Procurement
Technology development
Human resource management
Firm infrastructure

Question 23

Assessing strategic capability - Value Chain Analysis - Margin

What does the “margin” represent in a value chain analysis?

Answer 23

The excess the customer is willing to pay over the cost to the firm of obtaining resources and providing value activities.

Question 24

Assessing strategic capability - Value Chain Analysis - Benchmarking

What is benchmarking used for in an organization?

Answer 24

To evaluate organizational performance in relation to best practices, helping quantify the effects of process improvements.

Question 25

Assessing strategic capability - Gap Analysis

What is gap analysis?

Answer 25

A comparison between an organization’s ultimate objectives and expected performance, identifying how to close any performance gaps.

Question 26

Assessing strategic capability - SWOT analysis

What does a SWOT analysis help an organization achieve?

Answer 26

It helps match strengths with market opportunities, develop strategies to convert weaknesses into strengths, and identify threats to convert into opportunities.

Question 27

Assessing strategic capability - SWOT analysis

What are the four quadrants in SWOT analysis?

Answer 27

Strengths
Weaknesses
Opportunities
Threats

Question 28

Assessing strategic capability - McKinsey 7S Framework

What are the seven elements in the McKinsey 7S framework?

Answer 28

Strategy
Structure
Systems
Shared values
Style
Staff
Skills

Question 29

Assessing strategic capability - McKinsey 7S Framework

What are the hard and soft elements of the McKinsey 7S framework?

Answer 29

Hard elements: Strategy, Structure, Systems
Soft elements: Shared values, Style, Staff, Skills

Question 30

Managing strategic capability

How can an organization develop its strategic capabilities?

Answer 30

Through adding new resources, using organizational learning, aligning existing resources to create new capabilities, and forming strategic alliances.

Question 31

Managing strategic capability

What are key methods for managing human capital to enhance strategic capability?

Answer 31

Skill development
Targeted training
Succession planning
Developing a dynamic team environment

Question 32

Managing strategic capability

Why can becoming over-reliant on human capital be dangerous?

Answer 32

It can create risks if the organization depends too heavily on individuals for competitive advantage.

Question 33

Managing strategic capability

What are the three categories of money as a resource?

Answer 33

Profitability
Wealth
Liquidity

Question 34

Managing strategic capability

What risks arise from insufficient liquidity in an organization?

Answer 34

Insufficient cash flow can prevent the organization from paying creditors and employees on time, leading to financial instability